Neumann: Bringing Opel To China "Utter Nonsense" - Badged As Buick Better

by Bertel Schmitt

July 5th, 2013 7:53 AM

neumann bringing opel to china utter nonsense badged as buick better

GM’s ailing Opel hopes to enter the American and Chinese markets, and through that for a speedier recuperation. It wants to do that under cover: Made in Europe Opels, sold abroad as Buicks. This according to a report in Opel’s hometown paper Mainzer Allgemeine Zeitung.

For Opel to look for salvation in China would be “utter nonsense,” Opel’s CEO Karl-Thomas Neumann told the paper. He knows that an entry in to the Chinese market is costly and risky. It would be less so with an established brand. Therefore, Opel’s management is looking into “exporting more cars to China and the U.S.A., where they would be sold under the Buick brand through Buick distribution channels – if the decision is positive,” Neumann said.

Neumann has plenty China experience from his former job as Volkswagen’s China chief. Whether Buick managers in the U.S. and China will be happy about the idea is a different question. Imported cars carry a 25 percent tariff in China, which makes them a hard sell unless they are in the high luxury segments – where some cars can’t be expensive enough for Chinese tastes.

The European car market is going through a brutal downturn, which is only survivable with strong exports and successful engagements in growth markets: Opel, PSA, and Fiat suffer while Volkswagen, BMW, Daimler thrive. Opel has for long been kept out of most of these markets, whereas Opel platforms underpin many cars sold there by GM.

#BertelSchmitt #Buick #China #Germany #GM #Opel

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7 comments

John Rosevear on Jul 05, 2013

The real news here is that Opel finally has a CEO who is thinking of himself and his business as part of global GM. Nope, not selling my GM stock just yet...

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Niky on Jul 05, 2013

Buick is definitely the way to go in China. The brand has a cachet there that would be unbelievable anywhere else.

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- Lorenzo on Jul 05, 2013
  
  Opel-made Buicks would probably sell in Europe, but GM likely thinks they'll steal sales from Chevrolet. The higher transaction prices would whittle down Opel's losses and maybe even lead to profits, but GM likely thinks they'll steal sales from Chevrolet. The better-designed Buick models would save Opel from having to compete with the likes of Fiat for low margin business, but GM likely thinks they'll steal sales from Chevrolet.
  
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Alluster on Jul 05, 2013

Makes a lot of sense to not reintroduce Opel in China/US. Buick is already established in the US and China and the sales channels are already in place. Most Buicks are re-badged Opels anyway. GM's upper management in NA would however be not too excited about exporting Opels from Europe. Not only is it cost prohibitive, it will get much harder for GM to cut capacity in Europe. It is much easier to cut capacity when the sales are kept low. GM should close Bochum as planned. Close another facility in Europe. Make the Opel Adam and Cascada in South Korea alongside the Opel Mokka. Export the Adam, Cascada and Mokka as Buicks into China and US and as Opel into Europe.

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Dr.Nick on Jul 05, 2013

Producing in high cost Europe to export to the USA and particularly China seems silly.

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- John Rosevear on Jul 05, 2013
  
  If auto factories break even at 80% of capacity, and your European factories are running at 65% of capacity while your USA factories are around 100% or a little over ("100% capacity" = 2 shifts working flat out, so plants can and do go over) and you can't build new factories in China fast enough to keep up with demand, it can make a lot of sense to build for export in those European factories.
  
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- Highdesertcat on Jul 05, 2013
  
  @John Rosevear Normally I would agree with your reasoning but building them in Europe (already at a premium), then shipping them to North America (added shipping cost), at what price point would they have to market these bastardized Opel/Buicks? My view is that all businesses, including car makers, have a finite life-span. Like many before them, GM and Chrysler included, Opel has run its course. Chop it up, pimp it out and let the pieces fall as they may. Keep up this endless effort to keep Opel afloat at any cost when so few people buy their products that they can't be profitable, and before we know it, bailed-out GM will bail Opel out at the US taxpayers' expense under the guise of some trumped up campaign that hails GM as somehow expanding its access to the global market so it will increase its revenue to the US Treasury once it can "borrow" fifty billion more against its overvalued stock. In for a penny, in for a pound!
  
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